We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Monday, 03 January 11
TAXATION FOR COAL MINING COMPANIES IN INDONESIA - A TAX EXPERTS VIEW
 COALspot.com - Mrs. Sri Wahyuni Sujono, managing partner of SF Consulting has wrote an exclusive report regarding taxation for coal mining companies in Indonesia for COALspot.com subscribers.
Currently, the conduct of Coal exploration, development and production in Indonesia is regulated by:
1.The Izin Usaha Pertambangan (IUP)/Mining Business License; and
2. The Perjanjian Karya Pengusahaan Pertambangan Batubara(PKP2B)/Coal Contract of Work (CCoW).
Tax Regime for a Coal Mining Company
The IUP company is subject to prevailing Indonesian tax laws. Unlike the CCoW, the IUP regulatory regime does not specify distinct tax rules. A CCoW company taxation terms in the Contract is lex specialis– that is, the terms in the contract override the general tax laws. For example, when certain specific tax rules are set out in a Contract, these tax rules take precedence over the prevailing tax laws. Generally, the tax rules in a Contract reflect those that are in force at the time the contract were signed, although there may be some exceptions. Typically, a Contract fixes the tax rules for the duration of the contract (with the exception of second generation CCAs where they generally follow the prevailing tax regulations).
Income Tax Rate
Under the prevailing Tax Law Regulations, a company is subject to corporate income tax on its net taxable profit. Net taxable profit is calculated based on gross income minus deductible expenses. The prevailing corporate tax rate for 2010 and onward is a flat rate of 25% of net taxable profit. If a Contract stipulates a specific corporate income tax rate, the Contract company may not be entitled to 25% corporate tax.
Income
Gross income usually represents sales of mining products and any other income earned by the mining company.
General Expenses
In general, deductible expenses are expenditures incurred to generate, maintain and collect taxable income and generally include an amount paid or accrued for all expenditures attributable to the company’s operations in a year which typically have a useful life of less than one year. Certain expenditures may not be tax deductible under the prevailing Income Tax law, e.g. donations and benefits-in-kind provided to employees. Some types of benefits-in-kind provided at the mining site may be deductible if the mine is located in a remote area (which is usually the case) and an approval from the DGT is obtained.
Exploration and Development Expenses
Exploration and development expenses may include camp construction, drilling, access road, project communication facilities, etc. On-site exploration expenses are generally deductible in the year the expenses are incurred provided the expenses meet the general deductibility criteria required. Exploration and mine development expenses should generally be capitalized and amortized upon spending rather than production.
Depreciation of Fixed Assets
Fixed assets are categorized into four categories, depending on the nature of the asset and its expected useful life. The rate at which the asset can be depreciated will depend upon the category of the asset. Assets are generally depreciated over 4, 8, 16 or 20 years and taxpayers may apply a diminishing balance or straight line approach to depreciation.
Amortization of Intangible Assets
Intangible assets may include pre-operating costs, patents, rights, licenses, etc. Costs incurred in the acquisition of mining rights with a beneficial life of more than one year should be amortized based on a production unit method, not exceeding 20% per annum.
Tax Losses Carried Forward
Tax losses can be carried forward for up to five years under the Tax Law and are utilized on a first-in-first-out basis. Tax losses cannot be carried back.
Reclamation Reserve
For accounting purposes, a mining company is usually required to maintain a reclamation reserve for environmental management and reclamation work during the contract period and at the end of the life of the mine. The reclamation reserve amount should be tax deductible provided that it is calculated in accordance with the prevailing energy/mineral resources sector laws/regulations. If the actual cost exceeds the reserve, the balance is generally tax deductible.
VAT
Under VAT Law No. 42/2009, coal is not subject to VAT. As a consequence, the input VAT paid to the company’s suppliers are not creditable. Some Contracts may adopt a VAT regime different than the prevailing VAT regulations. For example, there may be provision that Input VAT may be creditable/refundable despite the fact that the coal being produced is not subject to VAT. During the pre-production stage of the Contract, the company shall not have any Output VAT due to there being no delivery of mining product at that point. Therefore, VAT overpayment is likely as the company should pay its Input VAT to vendors for purchases of taxable goods/services. Some Contract companies should collect and pay VAT charged by its vendors (i.e. Output VAT) directly to the State Treasury (act as a VAT collector) as required by the relevant Contract.
Withholding Tax
The Contract company is obliged to withhold income tax from payments of dividends, interest, royalties and most types of services. The Withholding tax rate will depend on the type of service and whether the service provider is a resident or non-resident that stipulated in the tax rules Contract. The general withholding tax rate for services is 2%. The Withholding tax on dividends, interest, royalty paid to Indonesia tax resident is at 15% while for non-resident is set at 20%, though this rate is reduced by most of Indonesia’s double tax avoidance agreements. Some Contracts may provide a reduced Withholding tax rate into nil or 7.5%.
OTHER TAXES
Royalties
Royalties are payable quarterly to the Government based on the actual volume of production according to details set out in the IUP/CCoW. The royalty is tax deductible.
Land and Building Tax
The company is required to pay land and building tax as set out in the IUP/CCoW. Dead rent is an annual charge based on the number of hectares in the Mining Area. The land and building taxes are deductible for income tax.
To download this report click here.
Writer’s Profile :
Mrs. Sri Wahyuni Sujono, graduated with a Business Administration degree from the University of Wisconsin-Madison, USA. She is a certified Tax Attorney, Tax Consultant and holds a Brevet C – the highest working license qualification, and is the managing partner of SF Consulting. Sri also has expertise outside tax consultancy; she is a Chartered Financial Consultant (ChFC) and a qualified lawyer, giving a more holistic outlook and approach to her services.
Sri has had over fifteen years of experience of tax consulting with Arthur Andersen and Ernst and Young Indonesia; three years of which she was a Tax and Business Partner. She is the Vice Chairman of the Taxation Committee at the Indonesian Chamber of Commerce (KADIN), the Head of Foreign Affairs in the Indonesian Tax Consultant Association (IKPI) and sits in the Board of Experts in the Indonesian Chinese Association (INTI).
Disclaimer: This report has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this report without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this report, and, to extent permitted by law. SF Consulting and COALspot.com, its directors, members, employees, agents do not accept or assume any liability, responsibility or duty of care of any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this report or for any decision based on it.
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Monday, 17 July 23
APPROVED AMMONIA-FUELED CONTAINERSHIP - BENEFITS AND RISKS: REED SMITH
Following the news in Offshore Energy that Korea Maritime Consultants has secured approval in principle from the American Bureau of Shipping for it ...
Friday, 14 July 23
CLEAN COAL USE KEY TO DEEP CUTS IN EMISSIONS, STABLE ELECTRICITY SUPPLY - CHINA DAILY
China must push for the clean use of coal and step up integration of the dirty fuel with carbon capture, utilization and storage to achieve sustain ...
Thursday, 13 July 23
VIETNAM'S COAL EMISSIONS PRIMED FOR SURGE AFTER IMPORTS JUMP - REUTERS
Vietnam’s thermal power emissions are primed for a steep climb this summer after the country’s imports of thermal coal soared to their ...
Monday, 26 June 23
COAL PRODUCTION AND CONSUMPTION UP IN 2022 - EUROSTAT
In 2022, EU coal production and consumption continued to increase, reaching 349 million tonnes (+5% compared with the previous year) and 454 millio ...
Wednesday, 21 June 23
QATAR STRIKES SECOND BIG LNG SUPPLY DEAL WITH CHINA - REUTERS
Qatar on Tuesday secured its second large gas supply deal with a Chinese state-controlled company in less than a year, putting Asia clearly ahead i ...
|
|
|
Showing 91 to 95 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- International Coal Ventures Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- Energy Development Corp, Philippines
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- Economic Council, Georgia
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- PTC India Limited - India
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Thai Mozambique Logistica
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
|
| |
| |
|
